Sifting Through Energy Company Offers in a World of Deregulation: Part 1

Two weeks ago while shopping for electricity I gave up. By “giving up”, I mean that after finding out I would be charged a $9.95 base rate each month our electricity use is under 300 kWh with renewal of our current contract (we’ve been under 300 kWh for the last 5 months), I attempted to sift through a hundred other offers and find an alternative. In a haze days later, I finally just signed the one year renewal contract and moved on with my life. It’s true; our energy costs will likely go up by approximately $50 over the next year because I just could not sift through any further information, nor make a decision on the information I had taken in during the grueling process of shopping for electricity in a deregulated market.

In the clarity afforded by time over the last week and a half, I decided that fine print and the inability to fully compare electricity plans should not force consumers to throw in the towel and sign onto any electricity company that comes their way. I mean, let’s face it: I am not a typical consumer. I usually revel in price comparisons, contractual nuggets, and gathering information. Sometimes I am fascinated, other times I want to make sure I am not getting screwed. If I was driven to just throw in the towel, how many others are doing the same?

I want you to be informed and to make good decisions in your electricity company choice—without a headache—instead of throwing in the towel like I did. Several people in my office were searching for electricity companies around the same time as I was, so I would like to discuss the issues we came up with while trying to find the best deal for us (thank you Helen, Kevin, and Jason for your input!).

Please note that this is based on our experience in the Houston market; however, if your market is deregulated, I am sure you will find some of these same issues.

Comparison Websites Only Scratch the Surface

Powertochoose.org is the website to use to start the electricity company search in Texas. When I entered my zip code, it came back with a staggering 213 possible offers. The information that is available for each of these offers is the Retail Electricity Provider, Avg. Price/kWh (1,000 kWh), Cost per 1,000 kWh, Rate Type (variable or fixed),Renewable Energy Content (%), length of service (month-to-month, 3 months, 12 months, etc.), and the cancellation fee. Based on whatever information you find important, you can filter and even export multiple offers into an excel sheet.

This is all great information, and allows a cursory glance at the total market. But after that, you are on your own. I was hopeful that if I exported the information to excel, more of it would appear (such as base rates, promotional offers for signing up, any extra charges, etc.), but that is not the case. There are links to special terms, FAQs and such for each of the offers; however you must navigate to each of these pages such as the terms and services—some are reasonable while others are a ridiculous 10+ pages long—to try to figure out answers to your other questions. Another tab you click on allows you to hold the cursor over each offer and see the terms of each promotion.

You can start to see the amount of legwork involved. These aggregate sites are a great tool, but do not offer all of the ins and outs when comparing different companies against one another.

Transparency Means Information Overload

I am a proponent of giving consumers information. But when too much is available, you have to needle through all of the words and paragraphs you do not care about in order to find what you do care about. I want to know about any base rates that are charged, any fees for introductory or promotional plans, whether or not there are additional rates added after the introductory period is up, etc. But this information is buried among lots of other terms and conditions. The best I could do with some offers was to go to their terms of service and use ctrl+find to enter things like “introductory” and “base rate” to find out this information. In many cases, it wasn’t there.

Despite Transparency, We Found Potential “Hidden” Fees

Before one of my colleagues made their decision, they sent me an email asking if there was any potential loophole that I could see. I didn’t see one. That is, until I did a random search for that company and “loophole” on google. I found that the base rate of $6.95 was charged every month for introductory and promotional offers, no matter what kWh usage you have. Talk about sneaky! This was not in their terms of service (or at least anywhere we could find it), and really took away the additional value in the “promotional” rate and promotional gifts you would receive by signing onto this offer instead of others. Of course none of this information was directly on the company’s website or on the powertochoose.org website. How many other sneaky fees are there buried in fine print, or not even available except for a random internet search?

In the next part to this series, I am going to collect some pricing for a list of electricity providers in the Houston region to try and help you sift through all of the fine print without having to click through each of the sites. After my experience, I want to help as many others as possible!

It’s great that you have such a wide selection of power companies to choose from! Competition keeps prices low. Here in Ottawa there’s one provider – Ottawa Hydro. I have heard wind about some “Bullfrog Energy” alternative, so perhaps prices will drop if Ottawa Hydro senses some competition!Julie @ Freedom 48 recently posted..10 Reasons to Use a Mortgage & Insurance Broker

Kind of makes you want to add solar panels to your roof. Our town is known for high rates and banned that option, but I have been thinking about using a solar cooker in the summer. At least it’s something.

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